Despite strong sales growth for the fourth quarter and full-year, Titan International Inc. recorded a net loss for both periods in 2017.
Titan reported a net loss of $32.7 million on net sales of $376 million for the 4Q ended Dec. 31, 2017. That compares to a loss of $14.7 million on sales of $307.3 million for fiscal 2016.
The 22% increase in sales was the fourth consecutive quarter of year-over-year double digit increases.
For the full year, the company posted a net loss of $66.4 million on net sales of more than $1.4 billion. That compares to a loss of $47.2 million on sales of more than $1.2 billion for the previous fiscal year.
“Our fourth quarter results continue to reflect the strengthening of our end-markets as well as the improvements we’ve made within the Titan organization,” says Paul Reitz, CEO and president.
“Our net sales grew more than 22% for the quarter, with this growth experienced in all segments and regions. During each quarter in 2017, we have seen net sales increase double digits when compared to the same period in the previous year.”
Reitz says the double-digit growth every quarter is encouraging.
Fire results in nearly $10 million write-off
“As a result of the previously announced September 2017 fire at our Titan Tire Reclamation Corp. facility located in Fort McMurray, Alberta, we recorded a net asset impairment charge or loss of $9.9 million during the fourth quarter as a result of the damage caused by the fire,” says Reitz. “Titan carries both casualty and property insurance for this facility and the equipment, as well as business interruption insurance.
“The asset impairment amount was partially offset by an initial $1.6 million of insurance advances received to-date. We anticipate receiving additional insurance proceeds and will reflect such proceeds in our results once the cash is received.
“On the strength of increased volume during the quarter, after adjusting for the asset impairment, we realized a 42% gross profit improvement during the fourth quarter over the same quarter of last year. Our adjusted gross margin in the fourth quarter of 2017 increased 164 basis points over the comparable prior year period to 12% of net sales, which was the highest of any quarter during 2017.
"After adjusting for the asset impairment, operating profit of $5 million reflects our highest performance since the second quarter of 2015 and the best fourth quarter since 2011. Adjusted EBITDA for the quarter increased by $15.0 million year-over-year to $22.1 million, which was more than three times the amount in the fourth quarter last year. The fourth quarter has historically been our weakest quarter, but the current quarter deviated from that historical pattern and resulted in an increase in our adjusted EBITDA sequentially from the third quarter."
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